The car or auto industry around the world is in a bit of trouble. Why? Simply because people are not buying new cars! In just the last two months, many car companies such as Bentley, General Motors, Honda, Jaguar Land Rover, Nissan, Toyota, and Peugeot Citroen have reduced the number of cars they’re making, laid off some of their workers, or shut down some of their factories. Even the world’s biggest car-maker, Toyota, recently announced that it will not make a profit for the first time in 70 years!
So why aren’t people buying cars? Cars are one of the most expensive things that people buy. They usually take a loan to buy a car. Since the global economy got hit last year, many banks around the world have had a shortage of money and are not giving out loans as easily as before. Also, many people have lost some of their savings and live in fear of losing their jobs. As a result, very few people are buying cars. This large and sudden drop in car sales has pushed most of the car companies into trouble.
The American car industry has been the hardest hit. Its troubles started even before global markets fell. Most American car companies were making large sports utility vehicles and pick up trucks. Earlier last year, the gas prices shot up and also awareness for being “green” started increasing. Both these factors drove more people into buying smaller cars. This was already causing problems for the American car industry.
The global car industry is quite complex. An American car company might have factories in Europe, and so when the American company suffers, jobs might be lost in Europe! Also, cars themselves are very complicated pieces of technology. A car can have a CD/DVD player, speakers, a GPS unit, heated seats, video cameras for reversing, sensors for parking, and so on. Many of these components are supplied by companies from all over the world. So the slowdown in the car industry is having a very wide and global impact! This is why many governments are trying to help their car companies by giving them financial help.